"New" Donors: A New Resource for Family Planning and Reproductive Health Financing?

Malea Hoepf Young

As an architect of the non-aligned movement in the 1950s, which emphasized sovereignty, non-interference, and South-South cooperation, India has been active in aid donorship and knowledge transfer since the 1950s, particularly in the South Asia region. However, in the 2000s, India has shifted its foreign aid policies, both in terms of its role as a donor to other countries and how it receives aid from bilateral partners. While India’s foreign aid funding is relatively small, it is increasingly tied to a package of economic and diplomatic advantages that can prove very valuable to other developing and transitional countries, as well as beneficial to India’s own booming economy, just as in DAC countries.
 
Traditionally, India’s foreign aid has focused on neighboring countries in South Asia, often in support of regional stability and countering the influence of neighboring Pakistan. The Indian Technical and Economic Cooperation (ITEC) scheme was initiated in 1964 and has provided training programs for 154 countries, focusing on South Asia and African members of the Commonwealth of Nations. The program focuses on training, project related activities, study tours, and provision of Indian experts. The program budget is $11 million, which provides training for 3,000 people each year. India also provides skilled personnel to multilateral organizations, as well as technical experts in various areas, while 55,000 Indians have worked as UN Peacekeepers.³⁴ India has also funded infrastructure projects in neighboring countries,³⁵ has been a contributor to the UN system's food program, and hosts a large number of refugees from Sri Lanka, Tibet, Bhutan, and Bangladesh. India’s aid is predominantly bilateral, including a mix of low-interest loans and grants, and while it is more open about its aid than China, the lack of reporting standards make aid flows difficult to track.^{36 37} 

In 2003, India’s aid program entered a new phase as the finance minister outlined a new approach to foreign aid, explicitly in line with its own economic development and international profile. The India Development Initiative changed India’s role as an aid donor and recipient, announcing that India would no longer accept tied aid, and that it would accept bilateral aid from only five countries­ – the U.K., U.S., Russia, Germany, and Japan – and the European Union. Notably, these were not the five largest donors, as the Netherlands provided significantly more funding to India than the U.S. or the E.U. India encouraged the Netherlands and other former donors to provide assistance to NGOs, or channel their funding through multilateral organizations. The basis of selecting the five bilateral countries is unclear, but the Indian government seems to be more willing to accept aid from countries on the UN Security Council, and thus important international allies, and less likely to accept aid from countries that have scaled back aid or voiced significant disapproval over Indian affairs, such as the 1998 nuclear tests and the handling of communal violence in Gujarat in 2002.³⁸ India’s new policies as an aid recipient led to a much publicized refusal of bilateral aid in the wake of the 2004 tsunami, in which India provided aid to neighboring countries, such as the Maldives and Sri Lanka, despite its own heavy losses.³⁹ In addition, in 2003 the Development Initiative announced that India would pay off loans to all but four countries, would cancel the debt owed India by several heavily indebted poor countries in Africa and Latin America (including Ghana, Mozambique, Tanzania, Uganda, Zambia, Guyana, and Nicaragua), and would increase grants and project assistance to developing countries in South Asia and Africa.⁴⁰
 
These changes came in the context of increasingly large foreign reserves in India, as well as increasing requirements for new markets, raw materials, and energy in the expanding economy. India is highlighting development partnerships with countries with oil, raw materials, or with large Indian Diaspora populations, although it still focuses mainly on countries in the South Asian region. Bhutan has received significant ODA from India since the 1960s. Because of its status as an important buffer state between India and China, India has supported hydroelectric power projects in Bhutan that now provide energy for India as well. India has provided military, economic and development aid to Nepal, and is significantly aiding Afghan reconstruction."⁴¹

As mentioned above, India does not report its development activities to the DAC, and does not classify and track funds in line with DAC standards, making it difficult to quantify aid volumes. Lines are blurred between development aid and foreign policy and trade interest. By one estimate, Indian aid amounted to $300 million in 2006, but because India couches its aid in terms of investment and partnership rather than casting itself as a donor, it is inadequate to look at India's ODA flows apart from the complete package of economic and political assistance to other developing countries. This report notes that “India is only a donor when it is also an investor, trade partner, or political ally, or can become one,”⁴² a phenomenon that is not unique to India and applies to many more “traditional” donors as well. While this broader relationship can be positive for partner countries, some components of Indian aid have potential negative effects. For example, India refuses tied aid from other sources, but many of the grants and soft loans extended to other countries are tied to Indian goods and services.⁴³ Further, its emphasis on non-interference means that Indian aid is not conditioned on good governance or human rights records.⁴⁴

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